Delegat continues to invest after record year

Delegat Group, New Zealand’s biggest listed winemaker, lifted operating net profit by 14 percent in the June 2019 year, but indicated it was unlikely to make further gains next year.

The winemaker, whose stable includes the Oyster Bay brand, posted a record operating net profit of $51.4 million for the 12 months to June 30. The earnings measure strips out movements in the fair value of its grape inventory and derivatives.

Delegat posted operating earnings before interest, tax depreciation and amortisation at $99.3 million from $89.6 million, an 11 percent boost.

The company sold more than 3 million cases globally, up 10 percent on a year earlier. Revenue rose 9 percent to $278 million.

In a presentation filed to the NZX, group chairman Jim Delegat said the record results were a testament to the strength of its business model.

“Delegat is investing to support its strategic goal building a leading global Super Premium wine company,” he added.

Delegat saw a 30 percent gain in case sales in its second-biggest market, the UK, Ireland and Europe.

Sales in its largest market of North America were up 7 percent while Pacific sales dropped by 2 percent to 780,000 cases.

During the period, $32.9 million was invested in growth assets, while another $43.3 million is earmarked for 2020.

“This capital investment supports the group’s plan to grow sales to 3,651,000 cases by 2022 and will provide for further growth beyond that period,” Delegat said.

The company is forecasting an 8 percent rise to 3.24 million cases next year. It said based on prevailing exchange rates its operating profit would be in line with this year’s performance.

Net profit, which including the fair value adjustments, increased to $47.4 million from $46.8 million. Delegat reported a $4 million fair value write-down in the latest period, compared to a $1.9 million write-up.

Drivers of growth will be Oyster Bay sales in North America, and Barossa Valley Estate wines around the world, managing director John Freeman said.

The board declared a 17 cent final dividend, payable Oct. 19 with a Sept. 27 record date.

The shares last traded at $11.72 and have gained 19 percent so far this year.

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